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Local restaurateurs who have mined Boulder's Pearl Street now look to East County, Denver for growth

Rents along walking mall pushing $50 per square foot

By Shay Castle

Staff Writer

Posted:
10/29/2016 08:17:30 AM MDT

Matthew Kowal, back left, Jesse Aratow, Matt Sanders and Scott Nichols enjoy lunch together at the Eureka restaurant on Pearl Street on Wednesday in Boulder. For more photos of Pearl Street restaurants go to www.dailycamera.com (Jeremy Papasso / Staff Photographer)

Boulder's downtown core has become something of a dining mecca for hungry locals and tourists alike, becoming the preferred location for hometown chefs to launch not just one but multiple concepts.

But a recent rash of outside interest along Pearl Street, and the area's ever-rising rents, has restaurateurs wondering if the days of growth on their home turf are over.

"It's a turning point," said restaurant owner Bradford Heap. "There are so many people coming in that aren't from Boulder that" might not know or care to eat local.

"I don't know if our identity as a food culture and what we stand for are going to make it."

First choice

Heap is referring to the hyper-local, hyper-healthy focus he employs at his two restaurants, Salt and Wild Standard, which sit side-by-side at 1047 and 1043 Pearl St. He sources locally for the vast majority of his ingredients, striving to hit all the Boulder buzzwords: organic, antibiotic- and hormone-free and void of genetically modified organisms (GMOs).

Heap is one of a handful of owners with more than one downtown eatery. Salt and Wild Standard are next to a trio of Kimbal Musk-owned ventures: The Kitchen and the Kitchen Upstairs at 1035 Pearl and Next Door at 1039.

Travel up the block and you'll see three dining options by Big Red F restaurant group: Centro Mexican Kitchen (950 Pearl), Jax Fish House & Oyster Bar (928) and The West End Tavern (926).

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Italian spot Via Perla shares the 900 block, the newest addition from Joe and Peggy Romano, who also own The Med and Brasserie Ten Ten, at 1002 and 1011 Walnut Street, respectively.

Farther east, farmer/chef Eric Skokan runs the adjoining Black Cat Cafe and Bramble & Hare on 13th Street. Even farther east and just off the mall, the ever-popular Frasca Food & Wine and Pizzeria Locale abut one another in the 1700 block of Pearl Street, the brainchilds of master sommelier Bobby Stuckey.

Each of these culinary kingdoms started with a single location, followed by new concepts in close proximity. Pearl Street — with an average 1.23 million visitors a year to the mall — was the obvious first choice for expansion.

"When you have a popular retail destination, that's where you want to go," said Dave Query, who owns Big Red F. "It's location, location, location.

"But it's getting harder and harder to do because the rents are unrealistic."

Rents doubled over decade

Restaurant space is going for between $45 and $50 per square foot in downtown Boulder — about double what it went for a decade ago, according to local realtors.

"Our rents went up $10 per square foot from what I was paying the prior year," said Bryan Dayton, owner of the Oak at Fourteenth, who resigned a 10-year lease on Friday.

"It was a very real discussion of, 'Do we not do this?' We ran the numbers and we think we'll be successful, but 10 years is a long time for a restaurant. Toward the end of (the lease), our margins will be extremely tight."

Increasingly, restaurateurs are looking to the Denver market. Dayton has opened Acorn and Brider; there's a Kitchen on 16th Street and a Next Door at Union Station; a Big Red F Lola Coastal Mexican eatery in LoHi and a Jax Fish House in LoD; and two Pizzeria Locales in the city.

"It's less expensive than Boulder and you have 10 times more people," said Frasca/Locale's Stuckey.

Rents in Cherry Creek and along the 16th Street Mall have reached $50 per square foot and up, according to local realtor Kelly Greene, but in many neighborhoods — the Highlands, Union Station — spaces are renting in the mid-$30s to low $40s per square foot.

More affordable, though less busy, are spots in Boulder County's other, burgeoning downtowns, which have offered opportunities for growth.

Big Red F opened a fried chicken concept called The Post in Lafayette, then expanded the fried chicken establishment to Longmont.

But as the locals look outside Boulder for room to grow, the nationals are starting to look in.

Server Ryann Morris brings a food order to a customer at the Eureka restaurant on Pearl Street on Wednesday in Boulder. (Jeremy Papasso / Staff Photographer)

Locals can't compete

Three out-of-towners set up shop this summer in two blocks on west Pearl: Tampa, Fla.-based World of Beer and all-American eatery Eureka and Mexican joint Bartaco, both at the new PearlWest development.

"We look for neat, downtown, core markets with an urban-tech vibe," said Eureka co-founder and chief discovery officer Paul Frederick. "The majority of our locations (there are 21) are in university towns or 'lifestyle' towns.

"We like to pick towns that match our culture, and we think we can offer better value."

Eureka signed a lease for the PearlWest spot three years ago — "We had a lease before they even started" building, Frederick said — and said years-long waits are common in the mostly mid-size markets it enters.

He wouldn't comment on the rent, but local realtors say a ground floor space would likely be priced in the mid-$40s. A rooftop restaurant in the same building is listed on the Gibbons-White website for $50 a square foot.

At those prices, rates are approaching those in larger markets like San Francisco and L.A., where the priciest neighborhoods fetch $45 and $52 per square foot on average, according to a recent report by the New York Times.

They are still less than half of the $120 per square foot for dining space in Manhattan and busy Brooklyn neighborhoods.

The comparative affordability of Boulder makes it an attractive market to deeper-pocketed chains, who have the resources from multiple locations to prop them up during lean times — or lower menu prices to be more attractive to customers.

'Losing soul'

That's a luxury the local guys say they can't afford.

"I can't increase my costs," said Oak's Dayton, "because then nobody will come in and eat."

Dayton and others worry the share of nationals will increase in Boulder, pushing out longstanding local operations in a commercial gentrification. And that data appears to be bearing out that reality.

Industy analyst firm NPD group shows that the number of chains grew by three percent in Boulder County from March 2015 to March 2016, while the number of independents dropped one percent.

That loss is slower than the national 3 percent decrease in independent restaurants; chains stayed the same nationally. And independents still outnumber chains in the Boulder metro, 429 to 339.

"It's just less possible for locals to come in and do what used to be the Boulder thing," Dayton said. "We're losing a lot of the soul we've had down here."

Defining 'local'

But a chain-filled Pearl Street isn't in the vision of Eureka's executives.

"We don't want to be across the street from a Cheesecake Factory or a BJ's (Brewhouse)," Frederick said. "We want to be next to Centro. We like small, intimate spaces, places we'd like to hang out."

He acknowledges the Boulder locavore vibe: Eureka got a couple one-star Yelp reviews after it opened from people who had never been there, because it was a chain. But he believes the restaurant's concept fits with the city's culture and will win them over.

"We recognize it's a small community and you have to earn the respect of the locals."

Winning over the locals is exactly what the natives fear will happen.

"It's naive to think that nationals haven't had success here," said Stuckey. "We think we're such an independent city, and (the population) is fairly supportive" of local establishment.

But, he added, given the long presence of The Cheesecake Factory on the mall, "it looks like they don't have a problem supporting nationals."

Many local operators, including Stuckey, are conducting their own national expansions. There are now three Pizzeria Locales in Kansas City, and two in Cincinnati. Big Red F, too, has a location in Kansas City: a Jax Fish House.

And that statistic from the NPD Group showing nationals growing and independents shrinking in Boulder? None of the local guys count as independents in that report, which limits the definition to operators with no more than two units.

By that measure, only Skokan and his Black Cat/Bramble & Hare are independents.

But Salt's Heap says there's more to the 'local' designation than just the number of restaurants.

"It's not just about what food tastes good and makes me money," he said. "It's thinking about where it comes from and what it does to the people who eat it.

"I buy local, from local farmers. When I spend a dollar, it stays here."

Boulderites, he said, have three chances a day to vote for what food system they want to support: Breakfast, lunch and dinner.

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